Exit Strategy for Property Management Company OwnersAll business owners should plan an exit strategy, no matter what their business. Do you think this is an odd statement if you are just starting a property management business or you are years away from retirement? You may think this is only necessary if you are now getting ready to retire or are planning to exit the real estate/property management business in the near future. You might consider changing your outlook on this matter.

There are various scenarios for why you could need an exit strategy. As they say, “life happens” and having an existing strategy is simply good business.

  • No one knows when the unexpected can occur, such as a family move, a serious illness, loss of a loved one, a licensing or legal problem, or some other life-altering event.
  • An opportunity to sell your property management business may occur. Someone contacts you and offers to buy your company and you may decide that it is a good time to sell.
  • You may have reached a plateau in your professional life and realize it is time to move on to doing something else.
  • You may need to plan for continuation of your property management business with a family member; failing to plan this exit can be a recipe for disaster.
  • Perhaps it is now time to plan retirement.

An exit strategy should be part of your business plan to realize the best possible return on investment during both the continuing operation of your property management company and when it is time to make an exit.

  1. Planning an exit strategy will set up a program for re-evaluating your business over its operational lifetime.
  2. Continual re-evaluation will result in improved property management operation.
  3. An improved property management operation generally results in increased income.
  4. Increased income builds a solid foundation for the valuation of your company to produce the highest gain.
  5. Not planning an exit strategy can result in major mistakes and possible losses when it is time to exit/sell.

What steps should you take to plan an exit strategy?

Begin with the end in mind.
You need to have a projection of the ending product/value of your property management business to plan your strategy. What type of income properties do you want to manage? What area do you feel will produce the best results? What services will you provide? What size of company do you ultimately want when it is time to exit? What income do you want to generate? Make time to sit down and carefully evaluate what where want your property management company to be when you exit.

Implement systems and documentation to create and run a well-oiled operation.
This directly affects the bottom line of any property management company. Managing chaos and a poor company image will only devalue your bottom line. A company that projects professionalism and quality organization will increase value. Your business plan should detail how you will accomplish this step.

Plan the income structure your property management business carefully.
If you have 100 property management companies, you will likely find similarities in what and how they charge but there will more than likely be 100 different variations in fees and charges. It is important that your business plan outlines a sound financial structure to fit your company goals that will produce the income to support the business model you planned. The financial history of a property management company is the basis for a marketable asset.

Creating a plan for an exit strategy is important, whether you are just starting, you have years in the business, or a plan to sell your property management business is imminent. Take charge, put together, and maintain an exit strategy for your property management company if you have not taken this step already.

LandlordSource has many products to help you with any stage of your business planning. To help you plan an effective exit strategy, we offer  The Practical Guide to Buying and Selling Property Management  and The Roadmap to Organizing Professional Property Management.

Jean Storms - Owner and Author of LandlordSource ProductsJean Storms, MPM® is the founder/author of LandlordSource and has been a NARPM® member since January 1993.

Disclaimer: LandlordSource does not represent the article content in this website as legal advice. It is shared information only and up to the reader to use this information responsibly, seeking legal advice as necessary to their business.